The rising cost for education in India is Troubling lot of Indian parent. It is assured that the cost for education in India will triple in the next 15 years. The biggest questions which every parent needs to answer is - are we prepared for such high cost?

Let us look at the probable increase in course fee over the next 15yrs.

Child insurance plans are the best way to secure your child's future and get away with the worry of the rising cost. Child insurance plans act like a regular insurance plan which are designed to meet your child's needs when you are not around. It provides a financial aid for your child's future needs.

A child plan is an insurance cum investment plan which serves two purposes:

• It provides a financial security to your child's future
• It acts as a finance tool during the turning point in your child's life such as future/ higher education, marriage, etc.

2 main reasons which we need to keep in mind while investing in a child plan is:-

• You survive the policy period-you pay premiums, the plan pays a fixed maturity at a fixed age of your child in tranches or lump sum as you decide. Fixed maturity at fixed age is very crucial as your child will need funds for higher education at a specific time period.
• You do not survive the policy period-full insurance cover is immediately paid to the family, future premiums are waived off and the plan pays a fixed maturity at a fixed age of your child in tranches or lump sum as you decide.

Reasons for investing in child plan

Let us list down few important reasons why a child plan is necessary:

• Child plan is the only plan that guarantees fund for your child's future even if the parent is not there.
• The design of the plan is such that the plan pays double in case the parent meets an eventuality.
• Premiums paid for child plan is eligible for a tax deduction under section 80c, while any income from the plan is Tax free under section 10(10) d.
• This plan ensures that the child's needs are taken care even if the parent is not around.

Types of child insurance plans:

Child ulips: under in this investments, it is mostly into equity markets (certain proportionate premium flows in the debt fund and rest into equity fund). Here the returns are quite high as compared to other Products, if invested for a longer period. Policyholder also has the option to invest in debt instruments which Is similar to traditional plans. The decision for switching the funds remains in the hands of the insured. However, the payouts are not guaranteed.

Child endowment plans: in this plan the amount of payout is guaranteed. Here, the investments are safe and made in low yielding products. However, the returns are not that high as compared to other Product, but are stable and predictable.

Things to look out for while investing in a child plan:

• The most important point while investing in a child plan is that the parent needs to be insured and not the child.
• Premium waiver benefit needs to be an inbuilt cover under the plan. If is not available the customer can opt as an additional rider.
• Start early, planning for a 10yr old child is A futile as years left to grow are less. However, you should start investing as early as between 1yr to 3yrs.
• Choose a staggered maturity as lump sum money can Be spend on some other less important purpose.
• Please disclose all the medical conditions while applying for a policy.
• Please read all the policy conditions carefully to choose the right product.